Health Plan Overview & Updates City of Sebastian City Council Meeting Monday, August 20, 2012 Presented by: Christian Bergstrom, Director – Analytical Services

Background: Claims Experience & Plan Changes

Total Physician Claims 2010-2011 Claims Experience Date MONTHLY PREMIUM   Total Hospital Claims Total Physician Claims Other Pharmacy Capitation TOTAL CLAIMS Loss Ratio Total Members October-10 $93,241.72   $48,204.75 $22,272.03 $6,345.03 $28,503.01 $128.71 $105,453.53 113% November-10 $89,723.92 $142,227.14 $27,439.22 $3,518.09 $16,719.27 $127.49 $190,031.21 212% December-10 $89,713.92 $61,367.14 $36,922.12 $5,223.52 $17,088.94 $128.10 $120,729.82 135% January-11 $39,857.47 $18,466.44 $11,821.58 $19,632.12 $123.22 $89,900.83 100% February-11 $89,222.81 $60,085.13 $21,255.17 $5,256.73 $9,157.53 $125.05 $95,879.61 107% March-11 $90,520.69 $37,711.96 $17,357.33 $16,624.98 $17,770.77 $125.66 $89,590.70 99% April-11 $86,363.98 $90,305.24 $18,213.99 -$5,956.38 $16,774.42 $123.83 $119,461.10 138% May-11 $88,869.53 $65,822.89 $27,049.95 $7,078.78 $15,312.38 $124.44 $115,388.44 130% June-11 $90,841.41 $212,309.30 $28,323.60 $31,822.68 $15,437.42 $130.54 $288,023.54 317% July-11 $90,781.28 $106,079.31 $38,329.36 $8,030.42 $16,111.70 $126.27 $168,677.06 186% August-11 $90,124.07 $152,633.34 $36,744.79 $11,407.43 $15,890.44 $129.93 $216,805.93 241% September-11 $91,110.84 $218,835.00 $19,288.30 $22,873.99 $15,069.46 $276,195.46 303% 117 113 112 110 111 2010-2011 Total $1,080,238.09   $1,235,438.67 $311,662.30 $124,046.85 $203,467.46 $1,521.95 $1,876,137.23 173.7% 1350

Total Physician Claims 2011-2012 Claims Experience Date MONTHLY PREMIUM   Total Hospital Claims Total Physician Claims Other Pharmacy Capitation TOTAL CLAIMS Loss Ratio Total Members October-11 $91,231.35   $53,182.89 $12,580.63 $9,626.98 $7,590.75 $130.54 $83,111.79 91% November-11 $90,229.13 $200,709.93 $9,745.54 $829.21 $911.84 -$12.81 $212,183.71 235% December-11 $84,580.45 $64,204.01 $11,945.86 $4,114.98 $2,014.87 $0.00 $82,279.72 97% January-12 $75,782.19 $18,069.72 $11,539.30 $1,717.62 $596.53 $31,923.17 42% February-12 $81,465.53 $22,815.71 $7,193.47 $6,611.32 $3,544.29 $40,164.79 49% March-12 $33,366.56 $5,795.53 $9,826.44 $3,339.44 $52,327.97 64% April-12 $78,456.92 $35,590.29 $11,015.33 $12,545.74 $5,645.05 $64,796.41 83% 110 106 104 103 101 99 2011-2012 Total $583,211.10   $427,939.11 $69,815.66 $45,272.29 $23,642.77 $117.73 $566,787.56 97.2% 733 Rolling 12 Months $1,034,938.23   $1,183,618.95 $219,551.66 $126,485.59 $101,464.17 $757.62 $1,631,877.99 157.7% 1291

Claims Per Employee per Month

Catastrophic Claims (12-months) 4 Individuals with billed claims > $50,000 $3,760,772.81 in total billed claims

Medical / Dental Renewal Medical Insurance: Initial Florida Blue Renewal: 14.8% Overall Increase or $140,598.16 Annual Increase Negotiated Florida Blue Renewal 10.4% Overall Increase or $98,706.96 Annual Increase Savings of $41,891.20 from initial renewal Dental Insurance: Florida Combined Life Renewal: 10% Overall Increase or $7,117.68 Annual Increase

Life / LTD / Vision Renewal Life and AD&D Insurance: Florida Combined Life Renewal: 0% Overall Increase Long Term Disability Insurance: Vision Insurance: Florida Blue (Davis Vision) Renewal:

Request for Proposal A RFP was released to the market on May 18th, 2012 for all lines of coverage Results: Medical: All carriers Declined to Quote due to large claimants, limited network, and/or uncompetitive rates Dental: 7 proposals Vision: 5 proposals Life / AD&D: 9 proposals Long Term Disability: 9 proposals

Renewal Recommendation Medical Insurance: Remain with Florida Blue but transition to an alternative HDHP 8.1% Overall Decrease in premium or $76,681.92 annual savings from current Single / Family Out of Pocket Maximum increases by $1,500 / $3,000 from current plan In Network Coinsurance Level increases from 10% to 20% Health Reimbursement Account: Use savings to increase employee’s Health Reimbursement Account amounts to 100% of Single / Family Deductible (Currently 50%). Total overall increase (including higher HRA amount) is 3% (Total overall increase renewing current plan with same HRA amounts is 9.4%)

Renewal Recommendation Dental Insurance: Transition dental plan from Florida Combined Life to Assurant 9.5% Overall Decrease in premium or $6,793 annual savings from current Assurant’s proposed benefits match current FCL dental plan Vision Insurance: Remain with Florida Blue’s (Davis Vision) vision plan 0% increase in rates

Renewal Recommendation Life and Long Term Disability Insurance: Transition Life / LTD plans from Florida Combined Life to The Hartford 31% Overall Decrease in premium or $11,456.62 annual savings from current Plan Changes: Life: Increased Accelerated Death Benefit LTD: Increased Own Occupation Period of 12 Months to 24 Months

$10 / $30 / $50 after deductible Benefit Changes: 2011-2012 Benefit HRA Plan 05180 / 05181 HRA Plan 05190 / 05191 Health Reimbursement Account $750 Single / $1,500 Family $1,500 Single / $3,000 Family Calendar Year Deductible(CYD) (In-Network / Out-of-Network) Single: $1,500 / $3,000 Family: $3,000 / $6,000 Out of Pocket Maximum (OOPM) Single: $3,000 / $6,000 Family: $6,000 / $12,000 Single: $4,500 / $9,000 Family: $9,000 / $18,000 Coinsurance- In Network Member pays 10% Member pays 20% Primary Care Physician Office Visit 10% after deductible 20% after deductible Specialist Office Visit Maternity Initial Visit Emergency Room Visit Urgent Care Facility Inpatient Hospital (Option 1 & 2) 20% / 25% after deductible Outpatient Hospital (Option 1 & 2) Ambulatory Surgical Center Advanced Imaging (MRI, PET, CT) Prescription Drug $10 / $30 / $50 after deductible Please note that Preventative Care is not subject to deductible or coinsurance. Employees receive this coverage for free.

Health Reimbursement Account How does the HRA work? Sebastian contributes $1,500 annually to each employee who participates in the health insurance plan. In addition, if you cover your spouse and/or child(ren), Sebastian will contribute an additional $1,500 annually for a maximum of $3,000 annually. These funds remain with Sebastian until they are actually claimed for reimbursement. Employees will receive a debit card to pay for medical plan expenses. If a provider does not accept a debit card, the user will pay the cost for the incurred expense at the time of service and then claim reimbursement from the plan administrator. This reimbursement is not subject to income tax. Even employees that utilize the debit card may have to submit a claim form along with the Explanation of Benefits from BlueCross BlueShield of Florida to validate expenses. All claims must be filed within 90 days after the end of the plan year in order to claim reimbursement. Any unclaimed funds at the end of the year will remain with Sebastian. Employees that participate in the employee funded flexible spending account (FSA) will utilize those funds prior to utilizing the HRA.

Health Reimbursement Account BCBSFL Sample Discounted Rates How does the HRA work (Example 1 – Employee Coverage) Out of Pocket Expenses BCBSFL Sample Discounted Rates 1 Primary Care Office Visit ($40/visit) $40 1 Specialist Office Visit ($250/visit) $250 1 Preferred Rx per month (12 x $40/month) $480 Total Cost $770 Annual HRA Account Contribution $1,500 HRA Reimbursement Member Out of Pocket Expense $0 Remaining HRA Balance $730

Health Reimbursement Account BCBSFL Sample Discounted Rates How does the HRA work (Example 2 – Family Coverage) Out of Pocket Expenses BCBSFL Sample Discounted Rates 6 Primary Care Office Visits ($40/visit) $240 2 Specialist Office Visits ($250/visit) $500 3 Urgent Care Visits ($150/visit) $450 3 Generic Rx per month (12 x $10/month) $360 Total Cost $1,550 Annual HRA Account Contribution $3,000 HRA Reimbursement Member Out of Pocket Expense $0 Remaining HRA Balance $1,450

Flexible Spending Account How does the FSA work? Employees may elect to contribute a portion of before-tax income each pay period Tax-free money is used to reimburse employees for eligible expenses incurred during the year for themselves & qualified dependents Two types of FSA’s will be offered: Health Care Reimbursement Account Dependent Care Reimbursement Account

Flexible Spending Account How does the FSA work? (Health Care Reimbursement Account) This benefit allows an employee to set aside money from each paycheck to cover services not covered by their medical or dental plan (i.e. deductibles, coinsurance, orthodontia, prescriptions, dental, glasses) up to a maximum of $5,000. This can be applied to unreimbursed medical expenses incurred by the employee, their spouse, and children, regardless of whether or not they are covered under the employee’s health insurance plan.

Flexible Spending Account How does the FSA work? (Dependent Care Reimbursement Account) This benefit allows an employee to set aside a month from each paycheck for child-care expenses (i.e. after-school care, day care, camp fees) up to a maximum of $5,000 filing single or $2,500 filing jointly.

Flexible Spending Account How does the FSA work? All selections are made for an entire year and no changes can be made during the plan year except for qualifying events. At the end of the plan year if any funds are unclaimed, they will be forfeited and returned to the City (“use it or lose it”) Example Without FSA Account With the FSA Account Gross Earnings $2,000 FICA, Federal Taxes -$500 Insurance Premium -$100 Health & Day Care Expenses -$300 Adjusted Gross Earnings -$1,600 FICA & Federal Taxes -$400 Net Earnings $1,100 Net Earnings $1,200

Health Care Reform Considerations for 2012 – 2013 Medical Loss Ration (MLR) Rebate Aggregate premium by market by state Rebate not due to Sebastian Women’s Wellness Initiative Summary of Benefits & Coverage (SBC) FSA limit reduced to $2,500 Does not apply for plan years that begin before 1/1/2013.

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